The Japanese yen surged to a seven-week high against the
dollar, while the Swiss franc touched a four-week peak against
the euro as U.S. stocks tumbled and safe-haven Treasuries
gained..

"The adjustment process is showing through in emerging
market FX rates, particular those of Turkey and Argentina," said
currency strategist Mark McCormick at Credit Agricole in New
York. "The G10 currencies, especially the yen, are benefiting."

This week the Turkish lira continued an extended
slide and plunged to a record low against the dollar.

The Argentine peso this week suffered its largest
one-day decline in more than a decade, and Argentine officials
on Friday loosened strict foreign exchange rules amid continued
peso losses.

The South African rand dropped to its lowest in five
years on Friday while the Brazilian real slid to a
five-month trough.

"Global investors remain firmly risk-averse; the selloff in
emerging markets this week, triggered in part by the steep
decline in the Argentinian peso, has fuelled renewed concerns
about the eventual withdrawal of liquidity as the Federal
Reserve tapers its quantitative easing program," said Samarjit
Shankar, director of market strategy at BNY Mellon in Boston.

BNY's bond indicators showed that portfolio managers were
reducing their exposure to emerging market local currency debt
in countries like Indonesia, Thailand and Peru, he said.

The dollar fell to a seven-week low of 101.98 yen and
was last at 102.24, down nearly 1 percent, while the euro slid
to 1.2222 francs, its weakest since Dec. 18. The euro
last traded at 1.2235 francs, 0.4 percent lower.

The euro was down 0.1 percent versus the dollar at $1.3679
, having jumped 1.1 percent on Thursday, stalling ahead of
resistance at $1.37.

Both the dollar and euro fell as much as 1 percent against
the yen, pressured as well by signs of a slowdown in
China and broad expectations of a tightening of monetary
conditions this year by some central banks.

The dollar index composed of six major currencies was little
changed at 80.467 percent.

Amid a jumbled start to the year for major currency markets,
analysts believed money was set to drain out of emerging market
economies. Supporting this view, investors have bid strongly for
a flurry of large bond issues in the euro zone this month.

That helps explain why, along with lacklustre U.S. data on
Thursday, the year's other big bet of a stronger dollar against
the euro has yet to materialize.

"European assets have become a sort of safe haven for
investors," said Alvin Tan, currency strategist at Societe
Generale in London.

Data published on Thursday showed the euro zone current
account surplus hit a record high in November.

More broadly, the banking and debt crisis that began in 2007
finally appears to be easing in Europe, and this year should see
central banks begin to reel in some of the enormous volumes of
cash they have pumped into the world economy.

In other currencies, the Australian dollar fell to US$0.8658
, its lowest in 3-1/2 years after Reserve Bank of
Australia board member Heather Ridout was reported as saying the
currency had not fallen enough and that the currency at 80 U.S.
cents would be a "fair deal" for the economy.

Sterling has also done well in January, surging to its
highest against the dollar in almost three years on Friday on
speculation the Bank of England could raise interest rates
before the end of the year. But it ended off 0.75 percent in New
York at $1.6504.